In Honor of Peter Bernstein

The Fall 2014 issue of the Journal of Portfolio Management, its 40th-anniversary edition, will include a tribute to the late Peter L. Bernstein. Few things have given me greater professional and personal pleasure than having been able to call Peter my friend.

Peter, who died five years ago at the age of 90, spent nearly six decades on Wall Street. He also worked at the Federal Reserve, taught economics at Williams College, toiled as a commercial banker, ran an investment-counseling firm, and consulted on economics and investing strategy with some of the world’s largest money managers. He was the founding editor of the Journal of Portfolio Management, which took as its mission to make investing as close to a science as the theory and the data would permit. He wrote nearly 20 books, including the twin masterpieces Capital Ideas, his history of how modern financial theory transformed investing, and Against the Gods, probably the best popular book ever written on risk.

Like most people who knew him, I regarded Peter as the philosopher-king of Wall Street, the man who had read everything, knew everyone, and had thought longer and deeper about the hardest puzzles than anyone else.

Yet the central lesson that emerged from Peter’s life and work was intellectual humility, not hubris. The more he learned, the more skeptical he became of his—or anyone’s—ability to predict the future.

Insatiably curious, Peter never stopped learning, and his favorite word when confronted with something he hadn’t yet thought of was “Wow!”

“To really learned men has happened what happens to ears of wheat: They rise high and lofty, heads erect and proud, as long as they are empty; but when they are full and swollen with grain in their ripeness, they begin to grow humble and lower their horns.”

Again and again, Peter would marvel that he could “make a living by reminding people of what they know only too well already.”

In 1999, I was thrilled when Peter asked me to write a guest essay for his newsletter. (To avoid any conflict of interest, he didn’t offer, nor did I request, any compensation for writing it.) For my topic, I chose the challenge that professional money managers faced in trying to take a long-term perspective in an increasingly short-term world.

In 2004, I drove up to Peter’s summer house in Brattleboro, Vt., to do a long interview. We talked for nearly four hours about everything from John F. Kennedy (Peter’s classmate in the Harvard College class of 1940) and Peter’s experiences as an intelligence officer during the London blitz in World War II to the problems of 401(k)s and the puzzle of why companies pay dividends.

Together, he and his wife, Barbara, could be as wickedly funny as classic comedy teams like Burns and Allen or Stiller and Meara. Peter mentioned during that interview that he and his lifelong friend, the economist Robert Heilbroner, had done everything together as children and teenagers. “We even lost our virginity together, at the exact same moment,” he recalled. “Not at the exact same moment, Peter,” Barbara said.